In this report

Our
Company

EuroChem is now ten years old. Over these years we have earned a merited place amongst the top ten global fertilizer producers. Our objective now is to not only become one of the top five players, but also to be one of the most profitable yet environmentally responsible agrochemical producers. We are a growing, sustainable, responsible and reliable company.

EuroChem, together with other large international agrochemical companies, aims to increase world agricultural productivity and respond to the challenges of supplying the growing world population with sufficient food. Sustainable development and responsible corporate citizenship are the founding principles of our business practice. Our economic approach is demonstrated by the sustainability of our expanding business and our consistent supply of quality agrochemical products to agricultural producers. Our environmental strategy is focused on reducing our environmental impact and includes ongoing compliance with international environmental standards. And in the area of corporate social responsibility, we continue to invest in developing our people, in our local communities and in maintaining a dialogue with our stakeholders.

Andrey Melnichenko
Chairman of the Board of Directors

The main tasks of our management team are to ensure EuroChem’s stability and development. In just ten years we have developed a world-class vertically integrated system of management. For a privately-held chemical company, we have very high standards of transparency, publishing financial and non-financial reports that are audited by international firms. Our interaction with stakeholders is mutually beneficial – not only do we maintain an open dialogue, but we also implement real partnership models with local communities and authorities. We are currently building a global company and our commitment to sustainable development will give us an additional strategic competitive edge.

Dmitry Strezhnev
Chief Executive Officer

Our competitive advantage

• Own raw materials (phosphates/apatite and, in future, potash)
• Vertical integration, including: own logistics assets (port terminals, rail stock); own distribution chain: own repair and maintenance divisions specializing in construction and equipment maintenance
• Production of iron ore concentrate as a co-product of apatite extraction at Kovdorskiy (5.7 million tonnes per annum)
• Low natural gas prices in Russia; despite their gradual increase, these will remain below gas prices in European and Ukrainian markets
• Unique advantages of the Gremyachinskoe potash deposit – for example its proximity to the Black Sea ports – will enable EuroChem to become one of the lowest cost potash producers
• Flexible production and a comprehensive product range allowing EuroChem to maximize margins according to market demand

Our priority is to enhance the development and efficiency of agriculture in Russia.

EuroChem is Russia’s largest agrochemical holding company and our domestic market is a key priority. Results for 2010 show that our sales of mineral fertilizers and ammonia in Russia increased by over 20% and reached 1.48 million tonnes.

The Company continued to build on its leading position in the Russian and CIS markets: EuroChem’s market share in nitrogen mineral fertilizers in Russia in 2010 exceeded 25%, while its market share in phosphate fertilizers exceeded 20%.

The Company’s distribution network in Russia encompasses 24 agricultural centers in the Southern and Central federal districts, which account for over half of the country’s mineral fertilizer consumption. The agricultural centers provide consultancy services and assistance to help farmers increase crop yields using a full range of products – fertilizers, seeds and plant protection products.

Click to enlarge

Our sustainable development strategy

The links between EuroChem’s commitment to sustainable development and the implementation of our strategic goals are:

1. To become a top five global fertilizer producer by both profitability (EBITDA) and volume in all three fertilizer segments (nitrogen, phosphate and potash), by growing faster than the market through investment in both organic growth and mergers and acquisitions. Contribution to sustainable development: our leadership in the sustainable development field brings us international recognition as a socially and environmentally focused and responsible Company.
2. To maintain/increase our cost advantage through vertical integration and investment in improving efficiency. Contribution to sustainable development: to inform our customers, partners and the public about our social programs and to promote positive brand awareness and enhanced competitiveness.

Further information is available in the Company’s annual report. http://ar.eurochem.ru/2010/

Our targets for 2011

Economic

• To carry out our plans to develop the Gremyachinskoe potash deposit and set up social infrastructure
• To begin operating the Tuapse transhipment terminal
• To gain accreditation for the Company’s management systems to international standards and to implement those management systems which do not require certification across our subsidiary companies

Environment

• To develop systems of environmental monitoring
• To adopt a comprehensive long-term environmental plan for EuroChem

Health and safety

• To maintain the total incident rate at EuroChem facilities below the five-year average (the total incident rate, T-2011, including Lifosa, must be below 108.2) (see page 66 for more information)
• To finalize a centralized procurement system for protective clothing and equipment
• To grade job roles and labor conditions according to the latest legislation

Social

• To sign long-term agreements with universities for specific enrollment programs
• To organize an international seminar on standards and evaluation systems in sustainable development
• To establish a youth hockey school at the Novomoskovsk arena
• To design and build an hockey arena in Nevinnomyssk
• To hold methodology seminars for teachers